Figure 8-2 Oriental Lamp Company manufactures lamps.The estimated number of lamp sales for the last three months of 2011 are as follows:
Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January 2011 sales is projected at 16,000 lamps.
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Refer to Figure 8-2.In going from the sales budget to the production budget, adjustments to the sales budget need to be made for

Question

Figure 8-2 Oriental Lamp Company manufactures lamps.The estimated number of lamp sales for the last three months of 2011 are as follows:
 Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Oriental Lamp expects to sell the lamps for $25 each.January 2011 sales is projected at 16,000 lamps.
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Refer to Figure 8-2.In going from the sales budget to the production budget, adjustments to the sales budget need to be made for

Quizplus · Accepted Answer

The production budget needs to take into account the desired level of ending finished goods inventory. Therefore, adjustments need to be made to the sales budget for the expected level of finished goods inventory at the end of each month.

Figure 8-2 Oriental Lamp Company Manufactures Lamps